This is correct. And this is how studios structure their deals with move theater owners. The studios take a greater cut in the first week(s) and that cut declines over time. Having cheap alternatives available at any time, especially early in relative terms, stings them. The whole pricing structure is, IMHO, silent collusion. It's maximizes their profit as long as they don't get disrupted. When they do get disrupted, they fight back, as is the case here, and it's the case with the health care industry, politicians, lobbyists, and any other member of the status quo, but now I'm ranting!

There are other factors at play also. Redbox is actually $1 per day. Keep it longer, pay more, all the way up-to the price of the DVD, in which case you just keep it. And probably more significantly, they can only hold a very limited supply: someone takes out that new release, it's out, and your options are then go online or another box hoping to find it, guess when the person that got it out will return it, opt for another movie, or, pay a higher price with another vendor to avoid these pitfalls.

Let me ask you a question, then: if Redbox were pricing rentals at $10, would the industry have a problem with them? No? How about $5? No?

It's the price.

What about 1 dollar 6 months after it came out on video?

You are being too simplistic.

It's the price relative to the time. It's not the price alone.